Tag: first sale

Know about the First Sale Rule in Apparel Sourcing

Related background

First Sale rule legally allows importers, such as U.S. fashion brands and retailers, to “use the price paid in the ‘first or earlier sale’ as the basis for the customs value of the goods rather than the price the importer ultimately paid for the goods, in certain circumstances.”

According to a 2009 study by the U.S. International Trade Commission (USITC), based on data input from the Customs and Border Protection (CBP), from September 1, 2008, to August 31, 2009, about 6.07% of imported woven apparel (HS Chapter 62) and 5.48% of imported knitted apparel (HS Chapter 61) used the “first-sale” rule, compared with the average of 2.4% for all U.S. goods imports over the same period. The report also noted that “Only the textiles, apparel, and footwear sector had both above-average First Sale use and an above-average tariff rate.”

While there have been no official updated statistics, media reports indicate that fashion companies, including EU luxury brands, were interested in leveraging the “First sale” rule as part of their strategies to legally mitigate the impacts of tariff hikes during President Trump’s second term.

However, in February 2026, Bill Cassidy (R-LA) and Sheldon Whitehouse (D-RI) introduced a bill called the Last Sale Valuation Act of 2026. The proposal would require customs duties to be calculated based on the last sale before export to the United States, effectively eliminating the current First Sale rule.

The bill also heats up the debate on the First Sale Rule. On the one hand, organizations like the National Council of Textile Organizations (NCTO), representing U.S. textile and apparel manufacturers, support eliminating the First Sale rule, arguing that most countries require last-sale valuation. Critics of the First Sale Rule also contend that it enables some importers to reduce their duty liability by declaring a lower transaction value.

In contrast, many fashion brands, retailers, and importers support retaining the First Sale Rule, arguing that it is a long-established and legally recognized customs valuation method that reflects the realities of global supply chains.

Summarized by Sheng Lu